Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Camden Property Trust (NYSE:CPT).
Is Camden Property Trust (NYSE:CPT) a healthy stock for your portfolio? Hedge funds are turning less bullish. The number of long hedge fund positions decreased by 5 lately. Our calculations also showed that CPT isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the fresh hedge fund action regarding Camden Property Trust (NYSE:CPT).
How have hedgies been trading Camden Property Trust (NYSE:CPT)?
Heading into the third quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the first quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in CPT a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Camden Property Trust (NYSE:CPT) was held by Millennium Management, which reported holding $89.5 million worth of stock at the end of March. It was followed by AEW Capital Management with a $73.3 million position. Other investors bullish on the company included Winton Capital Management, Citadel Investment Group, and Carlson Capital.
Seeing as Camden Property Trust (NYSE:CPT) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds that elected to cut their entire stakes last quarter. At the top of the heap, Josh Donfeld and David Rogers’s Castle Hook Partners dumped the largest position of all the hedgies followed by Insider Monkey, totaling close to $4.5 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $1.9 million worth. These transactions are interesting, as total hedge fund interest dropped by 5 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Camden Property Trust (NYSE:CPT). We will take a look at AXA Equitable Holdings, Inc. (NYSE:EQH), Dropbox, Inc. (NASDAQ:DBX), AEGON N.V. (NYSE:AEG), and Henry Schein, Inc. (NASDAQ:HSIC). This group of stocks’ market values are closest to CPT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQH | 32 | 1112788 | -3 |
| DBX | 43 | 918956 | 10 |
| AEG | 9 | 36666 | -1 |
| HSIC | 24 | 1557796 | 2 |
| Average | 27 | 906552 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $907 million. That figure was $316 million in CPT’s case. Dropbox, Inc. (NASDAQ:DBX) is the most popular stock in this table. On the other hand AEGON N.V. (NYSE:AEG) is the least popular one with only 9 bullish hedge fund positions. Camden Property Trust (NYSE:CPT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CPT as the stock returned 7.1% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
